This previous post detailed the appeal of Carlos Rodriguez and Joel Esquenazi to the 11th Circuit on a host of issues, including whether the trial court erred as a matter of law in its jury instruction regarding what constitutes an “instrumentality” of a foreign government – and thus who are “foreign officials” under the FCPA. As noted in the post, this is a historic appeal, the first time in the FCPA’s history that “foreign official” will be squarely before an appellate court. Certain of the appellant’s arguments are based on my “foreign official” declaration – see here.

In summary, the DOJ states as follows as directly relevant to “foreign official.”

“The district court’s instructions on the meaning of ‘instrumentality of a foreign government’ were correct. The instructions stated that an instrumentality must perform a governmental function and provided a nonexhaustive list of relevant factors for the jury to consider in deciding whether Teleco was an instrumentality of the government of Haiti. Courts have used similar tests to determine whether an entity is an instrumentality in other contexts and relied on many of the same factors. The evidence sufficiently established that Teleco was an instrumentality of Haiti during the relevant time period. The government, through its national bank, owned 97% of Teleco’s shares, and, if Teleco had been profitable, those profits would have accrued to the government and the national bank. Because it was not, the national bank subsidized Teleco. Haiti’s president and high-level ministers controlled Teleco through their appointment of Teleco’s board of directors and general director. Teleco’s status as a government instrumentality is also reflected in Haitian law that subjected Teleco officials to its prohibitions against official corruption. Defendants’ narrow construction of the term ‘instrumentality’ is inconsistent with the terms of the FCPA and Congressional intent. The prohibitions in the FCPA are expressed broadly and reflect Congress’s purpose to combat the problem of pervasive foreign bribery. Defendants’ interpretation of the statute is also inconsistent with the provisions of an international treaty and with Congress’s explicitly-stated intent, when amending the FCPA, to conform the statute to the treaty. The term ‘instrumentality’ is also not unconstitutionally vague. It provided fair notice that defendants’ bribery scheme, which involved intentional conduct and had no innocent explanation, was illegal. Moreover, defendants cannot complain that they were left guessing about the legality of their actions when they could have requested an opinion on that question from the Attorney General but did not do so.”

“The instructions on the knowledge element of the FCPA were not plainly erroneous. The government was not required to prove that defendants knew that the recipients of the bribes were “foreign officials” under the statute’s legal definition, and the instructions, when viewed as a whole and in the context of the entire trial, made clear that the jury had to find that defendants believed they were bribing an employee of a foreign government instrumentality. Overwhelming evidence supported the jury’s finding on that element. Defendants applied for political risk insurance, which was needed only because a foreign government was a party to the Terra-Teleco contract, and they repeatedly referred to Teleco as a government-owned entity during the application process. Esquenazi also testified that Teleco was government-owned at a deposition. The court did not err in giving a deliberate ignorance instruction. It was appropriate as to the FCPA counts without a showing that defendants purposely avoided learning all the facts because the statute explicitly equates knowledge of a circumstance with awareness “of a high probability” that the circumstance exists. […] The evidence also supported the instruction. Despite the highly suspicious circumstances surrounding the payments that Rodriguez authorized to the third-party intermediaries, he claimed that, although he was in charge of Terra’s finances, he did not know their true purpose. Even if the court erred in giving the instruction, any error was harmless because the evidence also established that Rodriguez knew that the payments to the intermediaries were bribes.”

As to my “foreign official” declaration, the DOJ states as follows.

“Defendants rely on a 144-page declaration by Professor Michael J. Koehler that was filed on behalf of the defendants in Carson […]. That declaration is not part of the record in this case, and this Court should not consider it. Although defendants suggest that this Court may take judicial notice of the declaration because it relates to legislative history, the declaration selectively reviews the legislative history and draws inferences in support of a defense motion to dismiss the indictment. As such, it is not necessarily the statement of a disinterested expert, it was not reviewed as a scholarly article, and it was never subject to impeachment in the case below. Even the district court in Carson did not rely on the declaration because it concluded that ‘resort to the legislative history of the FCPA [was] unnecessary.’ […] If the Court is inclined to consider the Koehler affidavit, the government asks the Court to similarly consider the declaration of FBI Special Agent Brian Smith, also filed in Carson, that discusses references to SOEs in the legislative history.” See here for a copy of Smith’s declaration.

[In Kiobel v. Royal Dutch Shell, the Second Circuit stated as follows concerning reliance of professor expert declarations filed in another case being used in the case – “we fail to see how statements made in an affidavit, under penalty of perjury, are any less reliable than published works whose accuracy is confirmed only by efforts of the student staff of law journals.”]